Indian and Malaysian leaders have sought to revitalize bilateral relations through increased trade, enhanced movement of workers, and the use of their respective currencies for transactions. This effort marks a significant shift from previous tensions that had strained relations. Historically, Malaysia, which hosts a substantial Indian diaspora of nearly 3 million, faced strained relations with India following controversial remarks by then-Malaysian Prime Minister Mahathir Mohamad in late 2019. Mohamad had criticized India’s revocation of the special status of Kashmir, India’s sole Muslim-majority region. This led to a decline in Indian imports of Malaysian palm oil, a significant issue given India’s status as the largest global buyer of edible oils.
Under the current Malaysian Prime Minister Anwar Ibrahim, who assumed office in 2022, relations have improved. Ibrahim has expressed a strong desire to strengthen ties with India. The two nations began settling trade transactions in their currencies—the Indian rupee and the Malaysian ringgit—in April 2023. This development has already led to an uptick in India’s palm oil imports from Malaysia.
During Prime Minister Anwar’s inaugural visit to New Delhi, Indian Prime Minister Narendra Modi announced the elevation of their bilateral relationship to a “Comprehensive Strategic Partnership.” Modi emphasized the potential for enhanced economic cooperation, highlighting that Malaysia had invested $5 billion in India over the past year. He identified semiconductors, financial technology, defense, and artificial intelligence as key areas for future collaboration.
Prime Minister Anwar expressed a commitment to revitalizing relations and exploring untapped potential in various sectors. Additionally, Indian Foreign Ministry official Jaideep Mazumdar disclosed that India would make a one-time export of 200,000 metric tons of non-basmati rice to Malaysia, an exception to the country’s existing export restrictions. Furthermore, India is interested in exporting defense equipment and aircraft manufactured by state-owned Hindustan Aeronautics Ltd. to Malaysia. The two countries have also agreed to a framework to ensure the welfare of Indian workers in Malaysia. With approximately 140,000 Indian workers currently employed in Malaysia, this figure is expected to rise as India seeks to expand job opportunities both domestically and abroad.
